Which Municipalities Absorb the Most EU-Funds (2019)
As the end of the current Programming period of the European funds approaches and 2020 is knocking on the door, we are witnessing a significant increase in the amount of funding. This is clear from the annual review conducted by IME of the allocated European funds at the district and municipal level. Besides the considerable increase, in most regions the ranking of districts and municipalities is basically unchanged compared to last year. The same goes for the nature of the larger projects.
Source: ISUN, ISUN 2020, IME calculations
As usual, most European funds per capita have been awarded in the capital city and Gabrovo district - 3129 leva and 3234 leva per capita respectively. This is calculated by using the average annual population in these regions for 2018. Relatively large amounts of money from the European funds are awarded in the Northwestern districts of Bulgaria, but this is partly due to the faster pace of population decline there. On the contrary, in Sliven, Kyustendil and Pernik districts, European funds are estimated to be less than 1000 leva per capita, but there is a high probability that by the end of the programing period these districts would exceed this amount.
The largest projects are in the infrastructure - for instance, the extension of the Sofia metro system, construction of roads and water cycles, due to their nature, require larger investments compared to other activities. This could be observed in the capital city, where the actual amount received for the Sofia metro improvement exceeds 500 million leva and in Blagoevgrad, where the funding for Struma highway construction amounted to 329 million leva.
Compared to the small number, but costlier infrastructure projects, there are many other projects that cost less. They are mostly focused on the improvement of urban environment, educational infrastructure and providing social benefits. The last two groups are key in the Southern regions in the country and especially in Kurdzhali the most expensive projects are precisely for renovation and reconstruction of schools and providing warm lunch.
Source: ISUN, ISUN 2020, IME calculations
Undoubtedly, more interesting is the data regarding the distribution of European finding at a municipality level, because it reveals in greater detail the regional imbalances in the fund utilization. The most visible in the distribution at a municipality level are the projects concerning water supply improvement and construction of waste disposal systems. These projects are usually shared between several municipalities and their cost significantly exceeds the cost of the projects that each municipality (especially the smaller ones) is able to use on its own. This is evident in several municipalities at the seaside, as well as in Pleven, Vratsa and Montana.
Since the beginning of the European funding distribution in our country until the middle of 2019, the largest amount of European funding per capita is in the districts:
- Dobrich - 5683 leva, due to a big project for a water supply improvement in the city;
- Kostinbrod - 5402 leva, due to a number of projects related to energy efficiency;
- Sozopol - 5172 leva, substantial part is from the previous programming period.
On the contrary, Kovachevtsi municipality has acquired only 32 leva per capita and is still the only municipality that does not have a single project in the new programming period. Similar situation could be observed in Dulovo (62 leva) and Dobrichka (116 leva). We could also add some of the smallest municipalities in the country that have only one project each for insignificant amounts of money. The major reason for that could be the limited administrative capacity of the small municipalities that does not allow them to compete effectively for European funding.
Most municipalities in the country acquire funding less than 1000 leva per capita- including 161 out of 265 municipalities in Bulgaria in total. Between 1000 and 2000 leva are another 70 municipalities and 7 are above 4000 leva.
When reviewing the utilization of European funding, we have to take into account that there is still no evidence of achieving the main purpose of the funds - cohesion, within the country as well as the towards the average European level of economic development. Furthermore, the local administration might focus mainly on the European funds instead of attracting private investments. The latter is proven to be more effective in creating new jobs and improving the living standard at a local level. This controversy highlights again the necessity for a reform in municipal finance and fiscal decentralization, combined with administrative reform and increase in the capacity at a local level.
